Wal-Mart Seeks $5 Billion U.S. Sales Gain Via Inventory

Wal-Mart Stores Inc. signage is displayed outside of a location in American Canyon, California. Photographer: David Paul Morris/Bloomberg

March 8 (Bloomberg) -- Wal-Mart Stores Inc., the world’s
largest retailer, projects that it could boost U.S. sales by
about $5 billion a year by keeping store shelves more fully
stocked.

Duncan Mac Naughton, chief merchandising officer for Wal-Mart’s U.S. stores, told suppliers’ executives in mid-February
that the retailer’s sales would be higher if some items weren’t
out of stock, said David Tovar, a spokesman.

Wal-Mart has been working for more than a year on improving
inventory levels to boost sales. The company hired two firms --
Acosta Inc. in the U.S. and Retail Insight in the U.K. -- to
walk the aisles and monitor stocking levels. The company also
has pulled its greeters from the lobby to help load shelves.

“One of their biggest concerns is out-of-stock items,”
Natalie Berg, an analyst with research firm Planet Retail in
London, said in a phone interview. “If there are items out of
stock, there is a real risk that the customer will take their
entire basket elsewhere.”

The $5 billion in additional sales would be more than the
$3.93 billion revenue gain Wal-Mart’s U.S. stores posted last
year. Revenue in the nation rose 1.5 percent to $264.2 billion
in U.S. revenue in the fiscal year ended Jan. 31.

Wal-Mart fell 0.2 percent to $59.77 at the close in New
York. The Bentonville, Arkansas-based company’s shares rose 11
percent last year.

Making Improvements

Wal-Mart has been making improvements with inventory and
product availability, Tovar said. He said the $5 billion
projection Mac Naughton made was a rough estimate in an “off-the-cuff” statement meant to motivate the company’s suppliers
and employees.

Tovar said improving product availability and lowering
prices has helped boost store traffic, contributing to the past
two straight quarters of increases in sales at U.S. stores open
at least a year.

“If we can get better on-shelf availability, he believes
it will lead to more sales,” Tovar said. “Product has to be on
the shelf for customers to buy it.”